Summary of the Testimony of Secretary Lorrie Keating Heinemann, Wisconsin Department of Financial Institutions to the FDIC Regarding the Petition for Rulemaking to Provide Interstate Parity for State BanksMay 24, 2005Washington, D.C.

Lorrie Keating Heinemann has served as the Secretary of the Wisconsin Department of Financial Institutions since her appointment by Governor Jim Doyle in 2003. In this position she serves as a member of the Governor's Cabinet and is responsible for coordinating the state regulation, licensing and enforcement activities for over 100,000 financial service providers who do business in Wisconsin. This regulatory oversight includes 231 state-chartered banks with assets of over $70 billion.

On behalf of the Department of Financial Institutions, Secretary Keating Heinemann will testify in support of the Financial Services Roundtable Petition to the FDIC. Secretary Keating Heinemann will restate the Department's opposition to the broad unilateral preemption by charter-granting federal banking agencies to provide context for the Department's support of the Petition. The Department continues to believe that the recent far-reaching federal preemption critically threatens the dual banking system and makes the Petition timely and important.

In order to highlight the importance of the dual banking system, Secretary Heinemann will discuss its role in creating and sustaining a competitive banking industry and a resilient economy in the United States. Furthermore, Secretary Keating Heinemann will describe how the dual banking system has allowed the states to become laboratories of regulatory innovation for the banking industry, using the creation of the Universal Bank certification as one example. She will also discuss how the impetus for this innovation will be lost under a weakened dual banking system.

Secretary Keating Heinemann will then address the concern that promulgating the rules requested by the Petition will lead to a gutting of states' consumer protection laws. She will speak about the strength of Wisconsin's consumer protection laws and long progressive tradition in this area. The outcome of the requested rulemaking will be to allow banks to operate on a single platform of their home states' laws and Wisconsin's strong consumer protection laws will benefit customers of Wisconsin state-chartered banks in all the states they operate in. Secretary Keating Heinemann will also state that state regulators, as well as state legislators and attorneys general, are in the business of protecting the consumers in their states. Therefore, it is unlikely, if not impossible, that any state would strive to be at the bottom for consumer protection in an attempt to gain a few bank charters.

Secretary Keating Heinemann's testimony will then discuss the Congressional intent of Riegle-Neal and its 1997 amendments. She will speak about the intent of "seamless regulation" so that state-chartered banks are not disadvantaged because they have chosen a state charter rather than a national charter and will state that the FDIC rulemaking to preempt certain state laws would result in a full implementation of the Riegle-Neal Interstate Banking and Branching Efficiency Act as envisioned by the United States Congress.

Secretary Heinemann will conclude by discussing the frequent choice of de novo banks to choose state charters and assert that their growth should not be impeded because of charter choice. This example is used to highlight the summary conclusion in support of the Financial Services Roundtable Petition and in favor of an FDIC rulemaking process to ensure state-chartered banks with multi-state locations have parity with their nationally chartered counterparts.